1 00:00:08,070 --> 00:00:10,919 Sean Aylmer: Welcome to Fear and Greed, The Week Ahead. I'm Sean Aylmer and, as 2 00:00:10,920 --> 00:00:13,739 Sean Aylmer: always, I'm joined by economist Stephen Koukoulas. You'll find him 3 00:00:13,740 --> 00:00:16,829 Sean Aylmer: at thekouk. com and on Twitter using the handle @ TheKouk, 4 00:00:16,829 --> 00:00:19,980 Sean Aylmer: that's T- H- E- K- O- U- K. Stephen, good morning. 5 00:00:20,460 --> 00:00:21,720 Stephen Koukoulas: Top of the morning to you, Sean. 6 00:00:22,259 --> 00:00:25,169 Sean Aylmer: Have you gotten over the weekend, big race meetings? 7 00:00:25,739 --> 00:00:28,379 Stephen Koukoulas: Route 1 racing the Everest, what a race that was 8 00:00:28,379 --> 00:00:32,519 Stephen Koukoulas: with fantastic races. And I think on the day in Melbourne 9 00:00:32,519 --> 00:00:35,459 Stephen Koukoulas: and Sydney, the combined prize money was 25, oh, no, 10 00:00:35,459 --> 00:00:37,710 Stephen Koukoulas: the Everest was 20 million, it says like 30 million 11 00:00:37,710 --> 00:00:41,370 Stephen Koukoulas: or something. So there's some serious money in horseracing going 12 00:00:41,370 --> 00:00:45,900 Stephen Koukoulas: extraordinarily well, unless I, oh, the bookies have got a 13 00:00:45,900 --> 00:00:47,490 Stephen Koukoulas: bit of my money, unfortunately. 14 00:00:47,580 --> 00:00:50,729 Sean Aylmer: Fair enough. Fair enough. Not a lot going on at 15 00:00:50,729 --> 00:00:52,680 Sean Aylmer: the moment, we'd just have quick look at the NAB 16 00:00:52,680 --> 00:00:55,170 Sean Aylmer: Survey last week, though. This is the Business Sentiment Survey. 17 00:00:55,170 --> 00:01:00,029 Sean Aylmer: I saw you quoted somewhere as suggesting that the fact 18 00:01:00,030 --> 00:01:03,480 Sean Aylmer: of the NAB Survey is showing sort of easing of 19 00:01:03,480 --> 00:01:05,580 Sean Aylmer: price pressures means that we shouldn't have any more rate 20 00:01:05,580 --> 00:01:07,979 Sean Aylmer: rises. Or am I misquoting you, Stephen? 21 00:01:08,459 --> 00:01:12,119 Stephen Koukoulas: No. You're quoting me perfectly. I love the NAB Survey. I think it's one of 22 00:01:12,119 --> 00:01:14,760 Stephen Koukoulas: the (inaudible) it's right up- to- date so it's 23 00:01:14,760 --> 00:01:18,869 Stephen Koukoulas: how business is responding to the questionnaire, actually last month. 24 00:01:18,870 --> 00:01:21,059 Stephen Koukoulas: So unlike GDP numbers, which come out with a long 25 00:01:21,059 --> 00:01:24,000 Stephen Koukoulas: lag and they're revised and they're volatile, this is a 26 00:01:24,000 --> 00:01:27,119 Stephen Koukoulas: survey that just asks businesses from the horse's mouth, " What's 27 00:01:27,120 --> 00:01:31,350 Stephen Koukoulas: happening to your business," and NAB amalgamate all those responses. And 28 00:01:31,980 --> 00:01:34,319 Stephen Koukoulas: the point that you were quoting me on is not 29 00:01:34,319 --> 00:01:37,560 Stephen Koukoulas: just the business conditions, business confidence, they are important. But 30 00:01:38,220 --> 00:01:41,399 Stephen Koukoulas: there's a series of subquestions, I suppose we could call 31 00:01:41,400 --> 00:01:44,639 Stephen Koukoulas: them, within the survey and they ask businesses " What's happening 32 00:01:44,639 --> 00:01:48,480 Stephen Koukoulas: to your labor costs," generally wages, " What's happening to your 33 00:01:48,540 --> 00:01:51,570 Stephen Koukoulas: input costs, so the costs of your widgets and all 34 00:01:51,570 --> 00:01:54,150 Stephen Koukoulas: the bits and pieces that go into your business and 35 00:01:54,150 --> 00:01:56,820 Stephen Koukoulas: then your selling price, and so are you putting up your selling 36 00:01:56,820 --> 00:01:58,619 Stephen Koukoulas: prices by a lot or a little or pulling them 37 00:01:58,620 --> 00:02:04,949 Stephen Koukoulas: down?" Now that had perfectly picked the upturn in inflation 38 00:02:05,400 --> 00:02:07,800 Stephen Koukoulas: two years ago to about 12 months ago, when we 39 00:02:07,800 --> 00:02:09,960 Stephen Koukoulas: had the peak at the end of last year. It 40 00:02:09,960 --> 00:02:14,520 Stephen Koukoulas: turned and it's beautifully tracking the official inflation right below. 41 00:02:14,520 --> 00:02:17,789 Stephen Koukoulas: Now there was a blip in July, when we had 42 00:02:17,790 --> 00:02:20,250 Stephen Koukoulas: the Fair Work Commission increasing the minimum wage so that 43 00:02:20,250 --> 00:02:24,299 Stephen Koukoulas: wage labor cost indicator grows. And there was a blip 44 00:02:24,299 --> 00:02:27,300 Stephen Koukoulas: the previous month for oil and petrol prices and I'm 45 00:02:27,300 --> 00:02:29,820 Stephen Koukoulas: surprised that that didn't sort of linger a little bit 46 00:02:29,820 --> 00:02:34,049 Stephen Koukoulas: longer, as they say, but alas, it didn't linger and 47 00:02:34,080 --> 00:02:38,369 Stephen Koukoulas: the most recent results were there were new cyclical lows. 48 00:02:38,370 --> 00:02:41,070 Stephen Koukoulas: So if the correlation between what the businesses is saying 49 00:02:41,070 --> 00:02:46,350 Stephen Koukoulas: about labor costs, input prices, selling prices continues to track 50 00:02:46,350 --> 00:02:49,530 Stephen Koukoulas: what the official inflation rate does, we've got inflation tracking lower. 51 00:02:50,099 --> 00:02:52,139 Sean Aylmer: Mm. We like that. We like that. 52 00:02:52,139 --> 00:02:55,740 Stephen Koukoulas: We do, indeed. And I'm sure the new RBA governor would be pleased to 53 00:02:55,740 --> 00:02:58,439 Stephen Koukoulas: see that because I do know that they pay a 54 00:02:58,440 --> 00:03:00,359 Stephen Koukoulas: lot of attention to the NAB Survey. And if they 55 00:03:00,359 --> 00:03:00,900 Stephen Koukoulas: did, so do I. 56 00:03:01,830 --> 00:03:03,810 Sean Aylmer: We're going to hear from Michelle Bullock, the new Reserve 57 00:03:03,810 --> 00:03:05,010 Sean Aylmer: Bank governor this week, aren't we? 58 00:03:05,520 --> 00:03:08,190 Stephen Koukoulas: Yes. She's giving a talk at the AFSA Annual Summit 59 00:03:08,250 --> 00:03:11,820 Stephen Koukoulas: and I think it's her first official speech. She's obviously 60 00:03:11,820 --> 00:03:14,969 Stephen Koukoulas: put out press releases with the recent interest rate decisions 61 00:03:14,969 --> 00:03:16,919 Stephen Koukoulas: and a few of the other bits and pieces with 62 00:03:16,919 --> 00:03:19,200 Stephen Koukoulas: the financial stability review on those things. But this is 63 00:03:19,200 --> 00:03:21,149 Stephen Koukoulas: a speech and it's a chance for her to talk 64 00:03:21,630 --> 00:03:24,900 Stephen Koukoulas: about where she may have a different, I don't know, 65 00:03:24,900 --> 00:03:28,230 Stephen Koukoulas: a different emphasis from her predecessor Dr. Lowe, where she 66 00:03:28,230 --> 00:03:30,599 Stephen Koukoulas: might be wanting to sort of read the economy, has 67 00:03:30,599 --> 00:03:34,500 Stephen Koukoulas: she got the forecasting team to revamp the forecast, what's the deal on 68 00:03:34,859 --> 00:03:38,039 Stephen Koukoulas: the oil price, Nauru, all these sorts of things. So 69 00:03:38,459 --> 00:03:40,530 Stephen Koukoulas: we don't have a topic just yet. I'm sure it's just a 70 00:03:40,530 --> 00:03:44,550 Stephen Koukoulas: general update on the economy, but more than normal when 71 00:03:44,550 --> 00:03:46,950 Stephen Koukoulas: we pay attention to what the Reserve Bank governor's of 72 00:03:46,950 --> 00:03:48,360 Stephen Koukoulas: the day is saying, this one is going to get 73 00:03:48,360 --> 00:03:49,170 Stephen Koukoulas: a lot of attention. 74 00:03:49,770 --> 00:03:52,619 Sean Aylmer: Yeah, Sure will. Now the big statistic gap this week 75 00:03:52,619 --> 00:03:54,840 Sean Aylmer: is labor force. Where are we up to in the labor 76 00:03:54,840 --> 00:03:55,500 Sean Aylmer: force market? 77 00:03:55,770 --> 00:03:58,950 Stephen Koukoulas: You know, on Thursday, we'll get the Labor's labor force 78 00:03:58,950 --> 00:04:02,610 Stephen Koukoulas: numbers. We do know that the labor force numbers have 79 00:04:02,610 --> 00:04:05,640 Stephen Koukoulas: been showing moderate employment growth now. We all know and I have to say 80 00:04:06,240 --> 00:04:09,690 Stephen Koukoulas: probably every month so I apologize keep repeating myself, but 81 00:04:09,690 --> 00:04:12,359 Stephen Koukoulas: the month numbers are very volatile. The last two months 82 00:04:12,359 --> 00:04:14,970 Stephen Koukoulas: of employment we had basically zero in the plus 60,000 83 00:04:15,060 --> 00:04:18,630 Stephen Koukoulas: so they're very choppy. So what the RBA and most 84 00:04:18,630 --> 00:04:21,089 Stephen Koukoulas: market (inaudible) put a trendline through them and so 85 00:04:21,089 --> 00:04:23,279 Stephen Koukoulas: a steady thousand per month, which is a probably a 86 00:04:23,279 --> 00:04:25,919 Stephen Koukoulas: fair (inaudible) of what's actually happening so the market 87 00:04:25,920 --> 00:04:29,488 Stephen Koukoulas: consensus for labor this week is about plus 25,000 so 88 00:04:29,488 --> 00:04:32,700 Stephen Koukoulas: just a little bit of pullback. And there's a bit 89 00:04:32,700 --> 00:04:35,190 Stephen Koukoulas: of a debate whether we get another tick up in 90 00:04:35,190 --> 00:04:39,000 Stephen Koukoulas: the unemployment rate from 3. 7 to 3. 8%. Just 91 00:04:39,000 --> 00:04:42,779 Stephen Koukoulas: for context, late last year, the unemployment rate was at a 48- 92 00:04:42,779 --> 00:04:47,999 Stephen Koukoulas: year low of 3. 4%. It's been sort of generally grinding 93 00:04:48,000 --> 00:04:49,860 Stephen Koukoulas: higher, not in a straight line. As I said, it's 94 00:04:49,860 --> 00:04:52,260 Stephen Koukoulas: a volatile number month to month, but if we get a 3. 95 00:04:52,650 --> 00:04:55,710 Stephen Koukoulas: 7 or a 3.8, it's certainly confirmed that the best of 96 00:04:55,710 --> 00:04:57,450 Stephen Koukoulas: the labor market news is behind us. 97 00:04:57,990 --> 00:04:59,310 Sean Aylmer: But they're not a bad thing. I mean, 3. 8% 98 00:04:59,790 --> 00:05:02,789 Sean Aylmer: is still a very low unemployment rate if you take 99 00:05:02,790 --> 00:05:06,509 Sean Aylmer: this at a, last 40 years as context, 3. 8 still really 100 00:05:06,510 --> 00:05:08,580 Sean Aylmer: low and we had mining going up a little bit, 101 00:05:08,580 --> 00:05:08,940 Sean Aylmer: do we? 102 00:05:09,540 --> 00:05:13,080 Stephen Koukoulas: Oh, look, indeed. I think anything sub- 4% is a 103 00:05:13,080 --> 00:05:16,440 Stephen Koukoulas: really good unemployment rate. But if you'd ask anybody two 104 00:05:16,440 --> 00:05:19,469 Stephen Koukoulas: and a half years ago, " Would you be content to 105 00:05:19,469 --> 00:05:22,469 Stephen Koukoulas: see the unemployment rate at 4%- ish, give or take," 106 00:05:22,830 --> 00:05:24,960 Stephen Koukoulas: I think they would've said, " Yes, that's fantastic." Because, again, 107 00:05:25,350 --> 00:05:28,740 Stephen Koukoulas: putting just aside the pandemic economic data and labor market 108 00:05:28,740 --> 00:05:32,940 Stephen Koukoulas: numbers and the JobKeep, JobSeeker sort of a hold in distortions, 109 00:05:33,510 --> 00:05:36,209 Stephen Koukoulas: good distortions, if you like, on the labor market numbers, 110 00:05:36,750 --> 00:05:40,349 Stephen Koukoulas: we had the unemployment rate hovering at 5% before the 111 00:05:40,440 --> 00:05:43,080 Stephen Koukoulas: pandemic came along and people were thinking, " Oh, that's still 112 00:05:43,080 --> 00:05:45,900 Stephen Koukoulas: pretty low. That's pretty good." Here we are, it's going 113 00:05:46,020 --> 00:05:49,890 Stephen Koukoulas: up from 3. 5 towards 4% so, and I guess 114 00:05:49,890 --> 00:05:52,650 Stephen Koukoulas: that's that narrow path that the previous RBA governor Dr. 115 00:05:52,650 --> 00:05:56,188 Stephen Koukoulas: Lowe was talking about. Can he sort of negotiate a 116 00:05:56,190 --> 00:05:58,440 Stephen Koukoulas: slower rate of growth with a little bit of an 117 00:05:58,440 --> 00:06:00,960 Stephen Koukoulas: uptick in the unemployment rate? But if we get to 118 00:06:00,960 --> 00:06:04,290 Stephen Koukoulas: the low point of the economic growth cycle and the 119 00:06:04,320 --> 00:06:06,420 Stephen Koukoulas: high point, if you like, in the unemployment rate that's sort 120 00:06:06,420 --> 00:06:08,789 Stephen Koukoulas: of in the low fours, that's not a bad outcome 121 00:06:08,790 --> 00:06:10,500 Stephen Koukoulas: compared to where we'd be, as you said, for the 122 00:06:10,500 --> 00:06:12,659 Stephen Koukoulas: last, well, 40 or even 50 years. 123 00:06:12,870 --> 00:06:15,989 Sean Aylmer: Surely we can call ourselves the Goldilocks economy, can we? 124 00:06:17,549 --> 00:06:22,950 Stephen Koukoulas: Well, I won't be suitable, but the federal elections are 18 months away so I can just- 125 00:06:22,950 --> 00:06:23,190 Sean Aylmer: Ah, good point. 126 00:06:23,190 --> 00:06:27,450 Stephen Koukoulas: ... Dr. Chalmers, if we can get through this, he'll 127 00:06:27,450 --> 00:06:29,279 Stephen Koukoulas: probably take a little bit of the credit for getting 128 00:06:29,279 --> 00:06:30,000 Stephen Koukoulas: the economy through- 129 00:06:30,000 --> 00:06:30,001 Sean Aylmer: Yeah, yeah. I daresay. 130 00:06:30,001 --> 00:06:35,039 Stephen Koukoulas: ... even though it's probably high commodity price and the other bits and bobs that obviously get there as well. 131 00:06:36,029 --> 00:06:38,040 Sean Aylmer: Ah, details, details. Stephen, have a great week. 132 00:06:38,550 --> 00:06:39,150 Stephen Koukoulas: Thank you, Sean. 133 00:06:39,570 --> 00:06:42,029 Sean Aylmer: That was economist Stephen Koukoulas, better known as The Kouk. 134 00:06:42,089 --> 00:06:44,639 Sean Aylmer: You can find him at thekouk. com and to follow 135 00:06:44,639 --> 00:06:48,780 Sean Aylmer: him Twitter, X really, on X, using the handle @ TheKouk. 136 00:06:48,809 --> 00:06:50,938 Sean Aylmer: I'm Sean Aylmer and this is Fear and Greed, The 137 00:06:50,940 --> 00:06:51,508 Sean Aylmer: Week Ahead.